Halliburton Trims 650 Jobs As Producers Scale Down Spending

In a bid to recover from the reduced spending by oil and gas producers due to weak prices, Halliburton Company (NYSE:HAL) plans to slash nearly 650 employees in four states, namely New Mexico, Wyoming, North Dakota and Colorado. It is expected to cut more than 178 jobs in Colorado while the staff lay-off in the remaining three states is not known yet. The mass retrenchment is in sync with the company’s strategy to revive business in the United States.

Also, the move comes within three months of Halliburton’s announcement of reducing 8% of its North American headcount and parking unused frack gear. The US crew that fracks well dropped 17% in the current year.

Per the analysts at Cowen and Co., expenses by U.S. independent producers are estimated to decline by almost 11% in 2019. While lower oil prices are draining profits, bankruptcy in the industry is on the rise.

This Houston-based oilfield service provider has realized that to enhance its operating efficiency amid challenging market conditions, it has to lower costs substantially.

Halliburton noted that for operators in North America where oil production has touched record levels, it’s more about returns now and not growth. The volatility in commodity price has convinced explorers and producers to adopt a relatively conservative approach to capital expenditure programs. This shift in customer strategy is likely to induce subdued demand for its oilfield services and equipment, putting much pressure on pricing.

This organizational restructuring is anticipated to help Halliburton achieve its purpose of minimizing expenses and optimizing operating excellence by challenging and backing its employees.

Halliburton is scheduled to announce third-quarter earnings on Oct 21. The Zacks Consensus Estimate for the company’s quarterly earnings of 34 cents is indicative of a decrease from 49 cents per share reported in the same period last year.

Zacks Rank & Key Picks

Halliburton carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include BP (LON:BP) Midstream Partners (NYSE:BPMP) , Dril-Quip, Inc. (NYSE:DRQ) and TransCanada Corporation (TSX:TRP) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

BP’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters.

Dril-Quip earnings beat the Zacks Consensus Estimate in three of the previous four quarters.

TransCanada earnings beat the Zacks Consensus Estimate in each of the last four quarters.

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